“An affront to justice” – leveling the playing field one pound at a time

The High Court has recently re-affirmed its inherent jurisdiction to make a ‘pound for pound’ order in respect of a party’s future legal costs in financial proceedings.

The case of LKH v TQA AL Z [2018] EWHC 2436 (Fam) involved an application for financial relief following an overseas divorce under Part III of the Matrimonial and Family Proceedings Act 1984, and an application for interim periodical payments by the wife (‘W’). The husband’s (‘H’) income amounted to £3.7m per year, while W’s spending was in the order of £100,000 per month, and neither had spared any expense in litigating both the children and financial remedy proceedings.

When the matter came before the High Court on 19 April 2018, W had already paid her solicitors £57,000 and owed a further £200,000 which she was unable to pay, while her future legal costs were estimated at nearly £250,000. At the hearing, in addition to an order that H pay interim periodical payments of £26,000 per month, Holman J ordered H to pay £250,000 towards W’s future legal costs, at the rate of £40,000 per month.

However, by the time of the next hearing on 24 July 2018 there had been an almost wholesale failure by H to comply with the April order and previous orders, such that he had still not filed a Form E, and now owed arrears of maintenance of £100,000 and three months’ arrears of costs of £120,000.

H claimed that his assets of US $45m were ‘illiquid and unrealisable’, though there had been no appeal against the April order, nor any application to vary it for material change of circumstances. Furthermore, in that time H had changed his solicitors and paid the new firm the sum of £95,000 which was described by Holman J as ‘intolerable’ and an ‘affront to justice’.

Having been taken to the judgment in Mubarak v Mubarik [2006] EWHC 1260 (Fam) and invited to make an order that H should pay £100 to W’s solicitors to discharge her arrears for every £1 that he paid to his own solicitors, the judge however refused to make such an order.

Instead, observing that the rationale of the decision Mubarak was to ensure a level playing field, or in other words a ‘pound for pound’ jurisdiction, Holman J ordered that H be injuncted from paying any further money to any firm of solicitors (or counsel acting on a Direct Access basis) unless he pay an equal amount, pound for pound, to W’s solicitors towards her arrears and current legal funding.

While such an order was described by Bodey J in Mubarak as exceptional and unusual, and ‘a strong thing’ (in the words of Lord Denning), it is clear that the High Court is prepared to make pound for pound orders in cases where, as in LKH, the circumstances of the case require and justify it.

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